Still scaling back

Market Review

Malaysia:. The FBM KLCI (-0.6%) extended its decline on weakness in selected banking and gloves heavyweights yesterday. The lower liners, however, rebounded, while the property sector (+2.0%) emerges as the biggest winner amongst the mostly positive sectorial peers.

Global markets:. The US stockmarkets ended mixed as the Dow (+0.1%) rose, but the S&P 500 (-0.2%) and Nasdaq (-0.6%) fell ahead of US Federal Reserve Jerome Powell speech that the inflation battle will prolong till 2023. The European stockmarkets also closed mixed, but Asia stockmarkets ended mostly higher.

The Day Ahead

Following the conclusive GE15 outcome, we continued to observe that the FBM KLCI taking a mild breather amid profit taking activities from selected glove heavyweights. Also, with the Wall Street ended mixed, the uncertain sentiment may spillover towards the local front. Nevertheless, traders could focus on the ongoing reporting season to uncover undervalued gems. Meanwhile, the market is still waiting for the formation of the Cabinet and it may provide clues for Malaysia’s growth going forward. Commodities wise, the Brent oil price rebounded above USD84 per barrel, while the CPO price surged above RM4,200.

Sector focus:. Given the uncertain setup, we expect investors to focus on defensive sectors such as the telco, utility as well as consumer sectors. Meanwhile, we opine that the focus may shift to construction and building material stocks ahead of the re-tabling of Budget 2023. Besides, the O&G sector could do well under the firm Brent oil environment.

FBMKLCI Technical Outlook

The FBM KLCI retreated for the second session after closing briefly above 1,500 last week. The MACD Histogram continues to extend positively for the second session, while the RSI is hovering above 50. The resistance is located around 1,490-1,500, while the support is pegged along 1,430-1,450.

Company Brief

Capital A Bhd is finalising its regularisation plan that could see the group divesting its aviation businesses, namely AirAsia Bhd and AirAsia Aviation Group Limited, to AirAsia X Bhd (AAX). In essence, the scheme will result in a clear separation between Capital A’s three main portfolios of businesses, namely the aviation group, the digital businesses and the logistics plus aviation services. The group is seeking an extension of time of 6 months until 7th July 2023 from Bursa Malaysia Securities Bhd to submit a holistic regularisation plan to remedy its PN17 status. (The Star)

Press Metal Aluminium Holdings Bhd’s 3QFY22 net profit rose 11.5% YoY to RM315.8m, buoyed by improved revenue on the back of production volume expansion and increased share of profits from associates. Revenue for the quarter jumped 33.2% YoY to RM3.85bn. A third interim dividend of 1.75 sen per share, payable on 30th December 2022 was declared. (The Star)

Genting Malaysia Bhd (GenM) has confirmed that its bid was unsuccessful for a new 10-year gaming concession for the operation of casino games of fortune in Macau. Nonetheless, GenM expressed its appreciation to the Macau SAR (Special Administrative Region) government for the opportunity to participate in the bidding process. (The Edge)

Hong Leong Financial Group Bhd (HLFG)’s 1QFY23 net profit grew 6.4% YoY to RM640.6m, thanks to higher contributions from its commercial banking division that offset the weaker contribution from insurance and investment banking divisions Net interest income rose 6.2% YoY to RM1.01bn. (The Edge)

Hong Leong Bank Bhd’s 1QFY23 net profit added 14.4% YoY to RM981.4m, driven by stronger interest income, effective cost management, low credit cost and robust contributions from associates. Net interest income grew 7.7% YoY to RM989.6m. (The Edge)

RHB Bank Bhd’s 3QFY22 net profit grew 10.2% YoY to RM700.5m, owing to higher net fund-based income, absence of modification loss and lower expected credit losses. Net interest income added 8.4% YoY to RM1.10bn. (The Edge)

PPB Group Bhd’s 3QFY22 net profit jumped 92.4% YoY to RM784.8m, on improved revenue contribution from all of its key segments. Revenue for the quarter climbed 38.7% YoY to RM1.65bn. (The Edge)

IHH Healthcare Bhd’s 3QFY22 net profit dropped 54.2% YoY to RM251.8m, due to higher net finance costs and a debit adjustment of RM58.8m relating to the application of MFRS 129. Revenue for the quarter, however, rose 3.4% YoY to RM4.60bn. (The Edge)

Petronas Dagangan Bhd’s (PetDag) 3QFY22 net profit jumped 131.3% YoY to RM276.0m, mainly due to higher gross profit from all segments, in line with an increase in volume sold during the quarter. Revenue for the quarter climbed 93.4% YoY to RM10.13bn. An interim dividend of 20.0 sen per share, payable on 27th December 2022 was declared. (The Edge)

Sime Darby Property Bhd’s (SDP) 3QFY22 net profit stood at RM56.1m vs. a net loss of RM5.2m recorded in the previous corresponding quarter, on the back of higher revenue. Revenue for the quarter grew 77.5% YoY to RM689.3m. (The Edge)

Alliance Bank Malaysia Bhd’s 2QFY23 net profit fell 8.2% YoY to RM158.4m, due to higher allowance for expected credit losses. Revenue for the quarter, however, rose 6.1% YoY to RM480.6m. A first interim dividend of 12.0 sen per share, payable on 28th December 2022 was declared. (The Edge)

UMW Holdings Bhd’s 3QFY22 net profit stood at RM100.7m vs. a net loss of RM47.9m registered in the previous corresponding quarter, supported by improved contribution from all three core business segments. Revenue for the quarter jumped 101.0% YoY to RM4.06bn. An interim dividend of 3.0 sen per share, payable on 15th December 2022 was declared. (The Edge)

Malaysia Airports Holdings Bhd’s (MAHB) 3QFY22 net loss narrowed to RM9.0m, from a net loss of RM182.3m registered previous corresponding quarter, driven by higher revenue. Revenue for the quarter climbed 87.2% YoY to RM863.6m. (The Edge)

Hengyuan Refining Co Bhd’s 3QFY22 net loss widened to RM640.5m against a net loss of RM54.0m recorded in the previous corresponding quarter, on adverse refining margin that offset the surge in market product prices. Revenue for the quarter, however, grew 54.8% YoY to RM5.03bn. (The Edge)

UOA Development Bhd’s 3QFY22 net profit jumped 190.2% YoY to RM96.2m, on progressive recognition of the property developer’s ongoing project. Revenue for the quarter soared 199.5% YoY to RM163.4m. (The Edge)

7-Eleven Malaysia Holdings Bhd’s 3QFY22 net profit swelled 9.5x YoY to RM13.7m, on higher revenue contributions from both its convenience store and pharmaceutical segments. Revenue for the quarter increased 45.3% YoY to RM988.2m. (The Edge)

Hextar Global Bhd has announced that its executive director (ED) Datuk Eddie Ong Choo Meng is stepping down with immediate effect to pursue other interest. With Ong’s resignation, Hextar Global appointed Rayburn Azhar Ali as the new ED, effective immediately.

Separately, Hextar Global’s 3QFY22 net profit jumped 93.6% YoY to RM14.0m, driven by strong revenue growth and higher margins from its specialty chemicals segment. Revenue for the quarter grew 44.2% YoY to RM162.3m. (The Edge)

Malaysia Marine and Heavy Engineering Holdings Bhd’s (MHB) wholly-owned subsidiary, Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) has secured a RM4.50bn contract from Petronas Carigali Sdn Bhd. The contract is for the engineering, procurement, construction, installation and commissioning (EPCIC) services for the Kasawari carbon capture and storage project, located off the coast of Sarawak. (The Edge)

Source: Mplus Research - 30 Nov 2022